Karl Marx Vs Adam Smith Essay

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In this corner we have Adam Smith, best known for his book The Wealth of the Nations where he introduced his theory of the ‘Invisible Hand’ to explain the market as a self-correcting mechanism. A strong proponent of free market and liberal trade policiess, division of labour and self interest. In the other corner holding the golden sickle, we have Karl Marx. The father of Communism, he authored Das Kapital, applying his theory of history to explain class exploitation and calling for an inevitable class revolution that would occur half a century after his death. A battle that still rages on from death, though modified and developed over time, the ideas of these two classical economists still stand in opposition.

Adam Smith, a Scottish moral
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Marx was around at a time when the spirit of revolution was still in the air in Europe. The French Revolution had just occurred and there was unhappiness with the feudal system in Belgium. Workers Unions had begun to pop-up across Europe, centered around their unhappiness and exploitation by their capitalist system. Inspired by the class struggle, Marx’s thoughts on the economy were translated in The Communist Manifesto and Das Kapital. Using Hegelian’s notion of historical progress and adapting Feuerbach’s materialism, Marx’s believed that he had a scientific approach to thinking about history with a focus on economics. This approach for him, created an understanding of capitalism and why it would, for him fail. Marx interpreted history and material circumstances to be determined by one’s social circumstances or class position.

Those who had power in the economy were those who had control and access to the means of production. Capitalists had control over and had access to the means of production, which mean that workers could only offer their
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Using Smith’s process for capital accumulation, Marx developed the idea to show how the capitalists were exploiting workers and how this exploitation would eventually lead to a class revolt. How would this occur? If we use Smith’s conceptualization, in a capitalistic perfectly competitive market, every market sells for its correct value- the value being the amount of labour put into making the product. The worker, in their self- interest wishes to sell labour in return for income and capitalists want to make a profit. But in order to make a profit, capitalists would need to either charge higher prices or pay less for labour than it is worth. Businesses would lose consumers to their competition if they charged higher prices, therefore they would then choose to underpay

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